There are no precise indicators of the cost of insuring government debt against default.
Credit default swap (CDS) spreads are commonly used as a proxy for measuring this cost. However, the strength of this proxy is highly questionable, as default is only one of a number of credit events enshrined in sovereign CDS contracts. Other credit events include missing coupon payments and restructuring of debt.
There are also a number of other factors besides market expectations of sovereign default risk that can affect CDS spreads. The market for developed country sovereign CDS is relatively small and illiquid, as it is unlikely that a developed country will default on its sovereign debt. The illiquid nature of the market can lead to large movements in CDS spreads, simply for technical reasons. In addition, there is evidence that developed sovereign CDS contracts are used to hedge a number of other risks, aside from the risk of sovereign default.
The five-year UK sovereign credit default swap spread was quoted at 147 basis points as of